EU Institute in Japan, Kansai (EUIJ-Kansai)International Seminar on Environment

Economic Instruments and Renewable Energy
in the European Union
From the experiences of the new EU accession countries

Edited by
Akira ICHIKAWA
Associate Professor, Institute for Industrial Research
Kwansei Gakuin University

1

EUIJ-Kansai International Seminar on Environment
Economic Instruments and Renewable Energy in the European Union
From the experiences of the new EU accession countries
Date

22nd and 25th February 2013

Venue

Tokyo-Marunouchi Campus, Kwansei Gakuin University(22nd Feb)
Institute for Industrial Research, Kwansei Gakuin University(25th Feb)

Organizer

EU Institute in Japan, Kansai (EUIJ-Kansai)

Co-hostInstitute for Industrial Research, Kwansei Gakuin University

The Report on EUIJ-Kansai International Seminar on Environment“Economic Instruments and Renewable Energy in the European Union
From the experiences of the new EU accession countries”
31st May 2013
Edited by Akira ICHIKAWA
Publisher
Institute for Industrial Research, Kwansei Gakuin University
1-155 Uegahara Ichibancho, Nishinomiya, Hyogo 662-8501 Japan
Tel +81-(0)798-54-6127
Fax +81-(0)798-54-6029
E-mail: euij-kansai@kwansei.ac.jp2

Forward
It has been said that the European Union has acted as the environmental
leader in international environmental negotiations, including those on
climate change. Particularly since the Treaty of Lisbon the EU has also
spoken to the rest of the world with one voice on these issues.
But in the European Union there are some Member States that areenvironmental leader countries such as Sweden, Austria, Denmark andGermany, and others that can be called “environmental laggards” such as thecentral and eastern European countries and southern European countries.
Most of the new European Union Member States in particular have had alower degree of the economic development than the EU15 countries andgreater difficulty implementing the European Union’s environmental laws
and policies.
The European Union has put forward the so-called “20-20-20 Strategy”,
under which it will reduce greenhouse gas emissions by 20% compared with
1990 levels, improve energy efficiency by 20% and increase the ratio of therenewable energy in the primary energy supply to 20% by 2020.
Furthermore, in the "Energy Roadmap 2050" discussion, the European
Union has advocated a long-term goal of reducing greenhouse gas emissions
by 2050 by 80-90% compared to 1990 levels. How are the EU’s ambitious
policies toward a low-carbon society seen in Poland, a member state whoseenergy mix is heavily based towards traditional fossil fuel sources?
In this environmental seminar, the EU Institute in Japan, Kansai, invited
Professor Kazimierz Górka of the School of Industrial and Environmental
Policy, Cracow University of Economics, to present his views about theenvironment and energy policies of the European Union and its future
prospects.
Professor Górka gave two lectures, entitled “The Application and Economic
Efficiency of Renewable Energy Sources in Europe” and “The Instruments ofEnvironmental Policy in Poland against the Background of the EU Economic3

Policy”. I would like to extend my heartfelt appreciation to Professor
Kazimierz Górka, and also to the many individuals who participated in andsupported these events.
Takayuki Yamaguchi
Vice-president, EU Institute in Japan, Kansai
Professor, School of Business Administration
Kwansei Gakuin University

4

EU Institute in Japan, Kansai (EUIJ-Kansai)International Seminar on Environment
Economic Instruments and Renewable Energy in the European Union
From the experiences of the new EU accession countries

Contents
Forward………………………………………………………………………………………

p.3

Takayuki Yamaguchi
Vice-president EU Institute in Japan, Kansai
Professor, School of Business Administration, Kwansei Gakuin University
The Application and Economic Efficiency of Renewable Energy Sources in
Europe………………………………………………………………………………………

p.6

Kazimierz Górka
Professor Emeritus, Cracow University of Economics
Department of Industrial and Environmental Policy
The Instruments of Environmental Policy in Poland against the Background of
the EU Economic Policy…………………………………………………………………

p.15

Kazimierz Górka
Professor Emeritus, Cracow University of Economics
Department of Industrial and Environmental Policy
Lecture’s Profile……………………………………………………………………………

5

p.29

Kazimierz Górka
Cracow University of Economics, Poland
Department of Industrial and Environmental Policy

THE APPLICATION AND ECONOMIC EFFICIENCYOF RENEWABLE ENERGY SOURCES IN EUROPE
Once the management of energy by Man was based on renewable resources.
The industrial revolution, and particularly the development of metallurgy,
and then of transportation led to a dynamic increase in the use of fossil fuels.
Also, they proved more convenient for the use of municipal economy.
Currently we are witnessing a return to the extensive use of biomass, as well
as exploration of new technologies making use of wind power, solar energy,
and other renewable resources.
The prospects for the more common use of renewable energy sources depend
on such factors as purposefulness, efficiency and economic profitability of
their use.

The purposefulness of use of those resources is defined by the demand forenergy. Apparently, the demand for energy is rapidly increasing. Until
recently, it was relatively easy to prove that the consumption of energy andfuels was growing at a faster pace than the pace of industrial production, oreven the rate of growth of the GDP. Those relations were changed by thetechnical progress and the pursuit of lowering the energy consumption inindustrial processes. The only examples of faster growth of electric energy
consumption are to be found in selected production processes, in particular inservices. Purposefulness of using the renewable resources is advocated more
and more forcefully in view of the shrinking resources of classic fossil fuels.
Even though the forecasted imminent running out of oil deposits, themantra preached from the late 1940s , or the assessment of deposits includedin the Club of Rome Report titled “The limits to growth” of 1972 were proved
wrong, it is obvious that the deposits of fossil fuels are not unlimited.
Currently we can observe the increasing costs of extraction due to the6necessity to reach for the less accessible deposits, or those with the smaller
content of the resource. That is why the importance of renewable resources
is growing in view of the finite deposits and non-renewable character of thefossil fuels.
Another aspect advocating the increased use of renewable energy sources isthe ecological aspect; they are not noxious to the environment. That is
because renewable energy resources involve very low emissions, if any, in theprocess of their use. In times of preventing the global warming, improving
health conditions and protecting life, that argument is more and moredecisive in programming the growth of use of renewable energy resources.

The efficiency of use of renewable resources , that is the extent to which theobjectives set for energy supply are met, varies and it depends on the kindand form of generated energy. To give an example, the use of water energy,
and wind energy in particular, are dependent on the weather andatmospheric conditions, which are not easy to forecast. Technical progress
does not always improve the efficiency of equipment used for generation of
the power.

Economic efficiency, i.e. profitability of power generation from renewable
resources mostly proves adverse from the microeconomic angle, in otherwords, in the financial terms perceived by a private investor. That is because
the electric power delivered by large water power plants – with the exceptionof those located in the mountainous areas - as well as the power generated bywind turbines, or solar cells is usually more expensive than that produced by
the traditional power plants fired by fossil fuels. High capital investment
involved in such plants and the transmission network – particularly from thewind farms on the seas – and worse use made of the nominal working hours
are the decisive factors.
That is why the state, having considered the macroeconomic calculation, andtaking into account the social and environmental factors, is trying to support
with subsidies, tax breaks and other preference tools the producers of energy
from renewable resources. In some European states, e.g. Germany and
Poland, the producers of energy from renewable resources have priority in7selling energy at favourable rates. Also the distributors are obliged topurchase such energy at fixed prices. Finally, the average cost of electricenergy delivered to the consumers connected to the state network is
calculated on the basis of the cost of generation and sale of all producers
included in such a system. In this way the consumers of electric energy
cover the varied costs and guarantee profit to all producers.
As we all know too well, the world is using more and more energy. It is quitedifficult to imagine the sheer volumes of fuels that are actually used. In
2010 alone the world economy used about 20,3 trillion tonne of fossil fuels (inconversion to coal equivalent). Consumption of hard coal amounts tostaggering 75% of total consumption, lignite 5.1%, oil 17.8%, and natural gas
0.6%. The extraction of those fuels is still growing, even though they are
extracted in more and more difficult conditions. Extraction of natural gas is
growing the fastest. Within 2000 – 2010 that growth amounted to 21.3%, andcoal with 18.5 % came second. However, most coal mines were shut down inWestern Europe, and that part of the world uses either its own, or imported
oil and gas. The European Union has been quite successful at implementing
the program of development of renewable energy sources, and an energy
saving program.
Table 1. The structure of energy consumption in Poland within 2000 - 2020
Consumptionin
Structure in %2010
terajoulesa)
2000
2000
2010
2000
2010
changeHard coal
1940687 2007947 103,5
50,4
45,9
-4,5
Lignite507526484708
95,5
13,2
11,0
-2,2
Coal and lignite total
2448213 2492655 101,8
63,6
56,9
-6,7
Oil
768502970635
126,3
20,0
22,2
+2,2
Natural gas
452713584375
129,1
11,8
13,3
+1,5
Peat and wood
123405180274
146,1
3,2
4,1
+0,9
Other renewable resources
7723
18054
233,8
0,2
0,4
+0,2
Waste fuels and others
47047
132343
281,3
1,2
3,1
+1,9
Total
3847603 4378336 113,8
100
100
12
jules
a) 1 jule = 0.239 calories, terajule (TJ) = 10
Source: Author’s own on the basis of Environmental protection, Main Census Office,Warsaw, 2011, p. 224.
Specification

8

Table 2. Production of primary energy in the EU in thousand toe
2009
2000
Total (UE-27)
940 822812 22186,3Great Britain
269 780
156 33458,0France129 426
128 478
99,3Germany
135 383
127 454
94,1
Poland78 98567 21285,1
Spain
31 50929 57993,95 countries
645 083
509 057
78,9a) toe – tonne of oil equivalent = 41,868 GJ or 11,63 MWh
Source: The same as for Table 1.
Specificationa)

2000

2009

Structure in %
2000
2009
100
100
28,7
19,2
13,8
15,8
14,4
15,7
8,4
8,3
3,3
3,6
68,6
62,6

Table 3. The share of energy produced from renewable resources in the final
gross consumption of energy in the selected states of the EU (in %)The share of energy from renewable Target share of energy
resourcesfromrenewable
Country
resources in 2020
in 2005
in 2009
Great Britain
1.3
3,0
15
Belgium
2.2
3,913
Netherlands
2.4
3,9
14
Irleland
3.1..
16
Germany
5.8
8,518
Poland
7.2
7,5
15
Spain
8.7
9,3
20
France10.3
12,023
Denmark
17.0
17,0
30
Romania
17.8
19,0
24
Estonia
18.0
18,0
25
Portugal
20.5..
31
Finland28.8..
38
Latvia32.6
36,2
40
Sweden39.841,049a) EU-27 in 2009 about 9%.
Source: Directive 2009/28/WE on the use of energy from renewable resources. “The
Journal of the EU” ” L 140/16 PL, 5.6.2009

Poland and other Central European countries (the Czech Republic, theSlovak Republic, Hungary, Bulgaria and Greece) have encounteredconsiderable difficulties in that area due to different climatic conditions, andmostly because of their heavy reliance on coal in power generation. The
above mentioned countries emit 0.75 – 0.9 tonne CO2 / MWh, while France or
Sweden below 0.1 tonne CO2/ MWh. Poland seems to be in a peculiar
situation; even though it reduced mining of coal from 200 million tonne toless than 65 million tonne annually, yet almost 90% of electric power
generation is based on coal and lignite.
9

Table 4. Production of renewable energy by sources in the EU in thousandtoe
112 725

2010
2009
190,4

Structure in %
2000
2010
61,3
67,6

5 881
31 49212 8173 886
166 801

124,8
103,9
670,0
903,7
172,7

4,9
31,4
2,0
0,4
100

Specificationa)

2000

2010

From
biomass
andwaste
incineration
Geothermal
Hydro
Wind
Solar
Total
a) toe – tonne of oil equivalent.
Source: The same as for Table 1.

59 1944 714
30 312
1 913
430
96 563

3,5
18,9
7,7
2,3
100

Poland’s population amounts to 38.2 million, which is 7.6% of the European
Union. The consumption of energy in 2010 amounted to 60.9 million tonne ofoil equivalent, i.e. mere 5.5% of energy consumption in the EU (1597
kg/inhabitant, i.e. 71.8% of the EU volume which amounts to 2225 kg). Yet,
Poland emits staggering 8.3% of greenhouse gases released in the EU (383.2
million tonne versus 4614.5 tonne of CO2 equivalent). This is the result ofburning coal in power plants and households.
One of the indexes of social and economic development, apart from GDP, hasbeen the consumption of power per capita. There has been a great variety inthe value of that index in the world, and its growth rate has been high. To
be more specific, within 1995 – 2010 the consumption of electric power grewby 26.8% (to 2996 kWh in 2010). In the North and Central America it grew
by 5.2% (to 10082 kWh), in Europe by 20.9% (to 6749%), and in Asia tostaggering 77.9% (to 1966 kWh). To give a comparison, Poland reached 4 129
kWh in 2010 in the consumption of power, while Japan consumed 7 296 kWhin the same year. It is worth mentioning that the progress in the use ofrenewables is due to their direct application in power generation.

There has been a great change in the environmental policy of the EU interms of the preferred structure of renewable energy resources. There has
been a retreat from biomass produced from energy plants (the only exception
being wood waste). Poland and other countries (following the example set by
10Brazil that turned to using sugar cane to produce methanol) started
plantations of rape to produce diesel fuel, and other plants to produce
methanol added to petrol, as well as “energy willow” as an additive to coal incoal fired power plants.
Table 5. Production of renewable energy by sources in Poland in thousand
toe
6 439

2010
2000
177,7

Structure in %
2000
2010
95,2
94,0

14
251
143
2
6 849

466,7
138,7
x
x
179,9

0,1
4,7
100

Specificationa)

2000

2010

From
biomass
andwaste
incineration
Geothermal
Hydro
Wind
Solar
Total
Source: The same as for Table 1.

3 624
3
181
0
0
3 808

0,2
3,7
2,1
0,03
100

In this way the share of renewable energy resources is growing intransportation and power generation with the resultant improvement of
economic indexes. Nevertheless, such a policy leads to monoculture in farm
production and decreases production of food. That issue has been raised by
Poland and other EU member states since the onset of ecology-oriented
policy, and finally the EU took a different stance.
As it has been already noted, the attention paid to renewable energy
resources is dictated not only due to the limited resources of fossil fuels, butalso due to the greenhouse effect. The latter still raises much controversy,
since it remains to be seen how much the economy and burning fuels are to
be blamed for it (according to some estimates, they jointly account for 1% of
greenhouse gases), and how much some other factors such as volcano
eruptions, natural changes of air circulation and the impact of the outerspace. The Report of the Intergovernmental Panel on Climate Change(IPCC) prepared in the last few months, to be published in 2014, informs
that the temperature of Earth has been rising slower than initially assessed.
Within 1990 – 2012 according to the UN the temperature rose only by
0.15 °C (not by 0.5 °C). Nevertheless, an increase of 0.1 °C is alreadysignificant. Taking an example of Kraków, Poland, over the past 200 years

11the winter temperature rose by 2 °C, and the summer season temperature
increased by 0.3 °C.
Climate Policy of the EU, and also the UN initiatives such as the Kyoto
Protocol have been based on IPCC materials. The results of that policy makea major impact on the economy. Stepping up regulations on burning coalwould pose a serious threat for Poland. In line with enforcing more stringent
directives, the price of electric power would go up a few dozen per cent, andmany people would be made redundant. That in turn would cause an
economic downturn. Hence, the comments in Polish and foreign press point
to IPCC hoax as the cause of those problems. Nonetheless, Poland has noted
the first success in that area once the Energy Commission of the European
Parliament (on our motion) agreed to remove a part of CO2 emissions
permits (the so called backloading), which should curb rising prices of thosepermits. Initially the prices were rising, yet over the past two years they
dropped from 15 to 5 euro/tonne CO2. According to the EU, such situation
does not stimulate the improvements in the technology of electric power
generation (hence the decision to cancel some emission permits). However,on recommendation of envirinmental organizations, the European
Parliament wants to go back to that issue. Consequently, the power
generation sector voice their concerns that the number of permits for CO2
emissions may be reduced in the near future. In February 2013 it was
supported by the Environment Commission of the EP.
Polish power plants have been receiving a part (75%) of those permits free ofcharge, and they have been purchasing the rest on the market (the exchange).
In 2013, the power plants will have to purchase emission permits for 1.3
billion PLN (3.2 billion euro).
Much controversy has been raised by the environmental projects to build
industrial installations for carbon capture and storage. There is much doubt
on the efficiency, and recently on the profitability of those projects. The costof installation amounts to 60 euro/tonne, and the emission permit cost is 5
euro/tonne CO2 .

12The EU is accountable for mere 10% of the global CO2 emission.
Nevertheless, it assumed a new target to reduce by 2020 the emission of CO2
by 20% of what it was in 1990. Should other countries pledge the same, thenthe EU declares to go to 30%. China, India and the USA, whose emissions
are the largest, do not wish any formal limitations so as not to make theireconomies less competitive, as well as to prevent relocation of most energy
consuming branches of industry to other countries.
In addition, the EU directives require increasing energy efficiency (lowering
energy consumption by industry and services) by 20%, and increasing theshare of renewables in final gross energy consumption to 20%, including 10%
share of biofuels for transportation (petrol and diesel fuel). Each country is
expected to draw up their plan of action and reach the set objectives.
The 3 x 20 rule sounds plausible and is by all means opportune, especiallyin the area of renewable energy resources and increasing energy efficiency.
Yet, drastic cuts in CO2 emissions seem to be too expensive for somecountries (within such a short time), and on global scale little effective.
Bibliography
1. Blue Book on Geothermal Resources. Office for Official Publications of theEuropean Communities, Luxembourg 1999.
2. Energy: Issues, Options and Technologies. Science and Society. European
Commission, Brussels 2002.
3. European Energy to 2020. A Scenario Approach. European Commission,
Luxembourg 1996.
4. European Energy and Transport Trends to 2030. European Commission,
Luxembourg 2003.
5. European Union Energy Outlook to 2020. European Commission,
Luxembourg 1999.
6. Europe in figures. Eurostat Yearbook 2012. European Commission,
Luxembourg 2012.
7. Europe’s energy position. Market Observatory for Energy, Luxembourg
2011.
8. E. U. energy trends to 2030. European Commission, Luxembourg 2010.

13

9. Wind Energy. The Facts. Office for Official Publications of the European
Communities, Luxembourg 1999.
10.World and European Energy and Environment Transition Outlook.
Publications Office of the E. U., Luxembourg 2011.

14

Kazimierz Górka
Cracow University of Economics, Poland
Department of Industrial and Environmental Policy

THE INSTRUMENTS OF ENVIRONMENTAL POLICY IN POLAND
AGAINST THE BACKGROUND OF THE EU ECONOMIC POLICY
1. Poland within the framework of the European Union
On the global scale, Poland belongs to the group of small countries: 0.2% of
global area (by which Poland ranks 68th), 0.6% of global population (34 th
positions), 1.3% of global trade (27th position in 2000 and 18th in 2010), 0.9%
of global GDP (18the position). However, in Europe Poland is considered to
be a medium-sized country; 1.4% of area (9th position), 5.2% of population(8th position), 3.3 % of foreign trade (10th position) and 2.5% of European
GDP (8th position).
In comparison to Japan, Poland is a slightly smaller country. The area of
Poland is 312.7 thousand sq.km, whilst Japan has 377.9 thousand sq.km..
Populations of both countries are 38.2 million and 127.3 million, respectively,
hence population density is 123 and 337 people/sq.km., respectively.
Nevertheless, the differences in economic development decisively show
Japan’s upper hand: 34 013 USD of GDP per capita in the face of 19 752 USD
in Poland.
Poland joined the EU in 2004. It occupies 7.1% of the EU area and has 7.6%of its population. Owing to the political and economic changes of the 1990s,
followed by opening its borders to western countries, taking advantage of thefree market, and making use of the EU structural and cohesion funds,
Poland managed to avoid the economic recession of 2008 – 2010 , and has
been developing at a relatively fast pace (GDP growth usually 2 – 3 points
above the EU average). Due to this, the national income in Poland
measured with the use of GDP index based on buying power parity increased
from 11.5 thou euro to 15.2 thou. euro within 2005 – 2010 timeframe, whichtranslates into an increase of 32%. In other words, the national income grewfrom 51% to 62% of average EU GDP (compared to U-16, i.e. the “old” EU
15

member states, it grew to 56%). That trend has been sustained as the Polishrate of growth is higher than the EU rate, despite the slowdown of recent
years (4.3% in 2011, 2% in 2012, forecasted 1.5% for 2013)
The economic growth in Poland is largely based on the changes within the
sectors of national economy, which are aimed at increasing the share ofservices in generating GDP (Table 1), as well as increasing the share ofmachine tool industry, electronic industry and plastics industry within totalindustrial production. In terms of professional activity index, Poland does
not have such a strong position (about 55% of population are 15 years old,and older) and the employment index, i.e. the figure representing thecurrently employed (50.4%, and 64% for people aged 20 – 64, compared to 69– 70% in western countries). Even greater difference can be observed in R&D
investment (0.6 – 0.7% compared to 1.9 – 2% average in the EU). The samedifferences can be noted in rankings of innovativeness and entrepreneurship.
In terms of ease of conducting an economic activity, Poland ranks 60 th in
the world, and in the category of competitiveness of enterprises 30 – 45
(depending on the method of assessment; over 150 countries were covered).
Poland takes much higher position in terms of standards of education, social
welfare and life expectancy. In terms of the standard of living of its citizens,
Poland ranks 30 – 33. It should be noted that Poland belongs to the countries
with the most dynamically growing indexes.
Table 1. Changes in the structure of employment and generation of added
value in %Employment
2005
2010
Farming and forestry
17,4
12,8
Industry and construction
29,2
30,3
Services
53,4
56,9
Total
100
100
a) Including non-market services 14.9% oraz 14.7%.
Sectors of economy

Generation of GDP
2005
2010
4,5
3,5
30,8
31,7
64,7a)
64,8a)
100
100

Source: Annual Census Book. GUS, Warszawa 2011 , and Author’s own calculations

16

Table 2. Basic indexes of the economic situation in Poland within
2005-2010
Specification(current prices a))
GDP in billion PLN
Investment in billion PLN
Industrial sold production in billion PLN
Construction and assembly in billion PLN
Export in billion euro
Turnover balance in billion euro
Balance of payments in % of GDP
Employment in economy, million of peopleb)
Employment, million of people
Number of unemployed at the end of theyear, million of people
Unemployment rate, %Average pay in PLN- in corporate sector
Budgetary deficit in billion PLN- in per cent of GDP

2005

2009

2010

983,3
131,1
687,8
89,5
71,4
- 9,8
- 2,4
12,73
8,79

1343,7
218,6
896,4
154,4
98,2
- 9,3
-3,9
13,77
9,77

1415,4216,01010,3160,0120,4- 13,8
- 4,5
13,83
9,83

Dynamics
2005-2010
fixed prices
125,9
152,9
133,9
154,5
..
140,8
187,5
108,6
111,8

2,77

1,89

1,95

70,4

17,6
2361
2516
28,4
2.9

11,9 c)
3102
3325
23,8
1.8

12,3
3225
3435
44,6
3.2

69,9
120,9
138,5
157,0
110.3

a) 1 zł = approx. 0.24 euro. b) Including farmers. c) According to Eurostat 9.6%.
Source: The same as for Table 1.

2. The reasons for the crisis and the ways of overcoming it
After a period of extensive economic growth and social development
following World War II, excluding the oil crisis of 1973 (which was more
attributable to supply problem than dwindling resources or a drop in
extraction), the USA and Western Europe experienced a small recession in
1992, and then 2000 – 2002. Nevertheless, the financial, and then economiccrisis erupted in 2007 first in the US, then in the countries of Western
Europe, and beyond. The financial crisis was caused first of all, as we know
too well, a spree of sub-prime loans lavishly granted by the American banks,
and the consequent burst of the “housing bubble” on the property market.
The echoes of that crisis, though much weaker, were also noted in Poland.
Commercial banks granted many bad loans, and investment banks
converted that debt into toxic derivatives, based on debatable value of theunderlying assets. Hence, paper money became the reason for the crisis. Itsvalue was based on the trust in the financial run of game which became bent
in pursuit of profits. The thesis of Paul H.Dembinski (a Pole living in
Switzerland) has become the bottom line of criticism of the model of economy
dominated by capital. He described the phenomenon of finacialization of17

contemporary capitalism, i.e. the dominance of financial spheres over theworld of real economy.
On the side, it is worth mentioning that the recession is continuing and,according to many economists, it is turning into a “depression with no end”,
the economic growth is almost non-existent, and there are no signs ofimprovement. Hence, it is not a crisis resulting from the classical cycle of themarket economy, but it reminds of a relatively little researched, long cycle
defined by Kondratiew in the 1930s, recurring every 50 years.
Returning to the roots of the crisis, it seems that the economic policy ofmany a government which led to the excessive budgetary deficit and public
debt, became a significant factor that contributed to the financial collapse.
The difficulties have been further exacerbated by the ageing societies andthe growing number, in relative and absolute terms, of retirees, enforcing
increased budgetary outlays allocated to the social security fund. The
reasons for the crisis also include exhaustion of a limited reserve of increased
productivity, workers qualifications, or even innovativeness (excluding
pseudo-innovativeness for the purposes of promotion and advertising).
There has been a new tendency to put more and more blame for the crisis on
financiers and managers of large corporations. They were blamed not for thewrong decisions they made and incorrect assessment of risk, but for being
dishonest and greedy. Speculation in financial services distorted theprinciple of maximizing shareholders value, and – along with other factors –increased disproportions in incomes to the level that is hazardous to theeconomy and not accepted by the society.
All this has resulted in – during efforts that have been made since 2009 to
overcome the crisis – abandoning the neoliberal concepts and adopting a newversion of Keynes’ theory in the economic policy. In this way, due to concerted,
almost of global proportions public intervention, many banks andcorporations were bailed out, preventing another great economic crisis. In
this way macroeconomic instruments of the economic policy of the state havebeen strengthened, most likely for the years to come.

18

In Europe, the governments of Great Britain and Germany bailed out thebanks and automotive concerns. Nevertheless, the EU has been riddled withproblems in negotiating long-term financial framework due to at least two
distinctive economic cultures, i.e. German macroeconomic discipline basedon the European Central Bank with its package of stabilization and growth,and the British liberalization expressing preference for the common
commodity market, services, labour and capital, yet without strict financial
oversight.
In Poland, a new form of state intervention was launched with theestablishment of a new partnership Polish Development Investment. This isa SPV (Special Purpose Vehicle) with equity of 10 billion PLN (approx. 2.5
billion euro) allocated from the state treasury. The expenses of thepartnership shall not encumber the budget, hence shall not increase its
deficit. The partnership, in conjunction with the state bank “Bank
Gospodarstwa Krajowego”, shall finance a project “Polish Investment”,
mainly in the area of infrastructure, e.g. highways and expressways, as well
as a railway and power projects to boost economic development and cut down
unemployment.
3. The challenges of the 21st century in view of the global, and the EU
issuesFollowing 2000, a dozen documents was prepared in Poland presenting the
programs of social and economic development up to the year 2020, 2030, oreven 2050. The programs were drafted on the basis of the already formulated,or newly set objectives of industrial policy, power, ecological, regional andsocial policies, and especially on the directives and recommendations of the
EU. The financial crisis and its consequences, which also affected Poland,
advocate reconsidering those long term forecasts and projects. To make them
credible it is prerequisite to reconcile current economic issues which were
formulated earlier, and which impact further development. Those issues
have not found any political settlement due to the weakening of government
elites and the ongoing disputes. To this day there exists, or is becoming evenstronger the domination of branch and corporate relationships (e.g. excessive
benefits for miners or teachers), public sphere lagging behind the expansionof the private sector (e.g. problems with IT systems in central and local
19

government administration), inflation of the law, or in other words, ashower of low quality legal acts. This process is accompanied by the growing
populism propagated not only by “Law and Justice” political party, but also
by other parties and groups, thus hindering the development of civil society
and implementation of necessary economic reforms. Consequently, theprogress of economic and social policy may become a decisive factor insuccessful coping with the civilization challenges of the 21st century.
The extensive report ”Poland 2030. Development challenges” presented byPrime Minister Donald Tusk in 2009 has become one of major program
documents. It lists ten most important strategic issues: economic growth and competitiveness, demographic situation (the falling birth rate),
 increasing professional activity and flexibility of human resources (alsofighting unemployment, especially among young and educated people), appropriate potential of technical and social infrastructure, energy and climatic safety,
 economy based on knowledge and development of intellectual capital,
 solidarity and regional cohesion,
 improved social cohesion (social inclusion and supporting citizen rights),
 efficient state,
 growth of social capital.
Critical comments that were made about that document pertain to theinsufficient exposure of ecological issues in light of sustainable and sustainedsocial and economic development, including stimulation of naturalenvironment preservation. In addition, it did not tackle the implementationof the so-called green tax reform which stipulated shifting taxes, proceedsfrom revenues and social security to the consumption of resources andenergy and the emission of pollutants.
Crucial national problems still include – despite implementation of thesystem reform – the shaping of political, economic and social systems.
Although the Constitution of the Polish Republic stipulates social market
economy based on economic freedom, private property, social consultationand solidarity to be the economic system of our country, yet there are many20

issues in need of development, such as full deregulation (liberalization) of
other sectors of the economy, decentralization of management, stabilizationand freeing from political influence of civil service, concluding the reform ofsocial security and health protection, of the system of education and learning,
restructuring of public finance. Hence, there are numerous problems to besolved under the slogans of liberal and democratic system, and the system ofmarket economy.
In addition, the market cannot cope with social and environmental problems.
Hence a new concept of the Third Way was devised, which advocates a newreform of social capitalism opposing the Anglo -Saxon capitalism, or even thesocial-democratic variant of the third way authored by Tony Blair.
More and more economists reluctantly concede, after initial doubts, thatsocialist principles work better in social life than the rules of capitalism(opposite to the economic practice). That is because socialism is an ideal
substantiated on moral grounds, yet it is not feasible in practice due to themechanisms of the market and human egoism. According to Gerard Cohen,
the biggest obstacle is the lack of mechanisms that would allow to exploit theinherent human magnanimity. On balance, the model of social market
economy needs further improvement.
Polish accession to the European Union poses challenges that involve
reaching an appropriate position, so that our country would not be a part ofthe so-called two- speed Europe (we are against such division), as well as
securing the EU subsidies for the period 2014-2020 and 2020 – 2030.
According to optimistic forecasts, the EU subsidies may facilitate Poland’snearing the average EU wealth standards already within 2020 – 2021 (someforecasts peg that GDP level to be reached in 2040). Another objective set for
Poland is joining the euro zone, despite growing social protests, which may
subside once that currency strengthens.
In the first place, Poland must cope with the budgetary deficit, public debt
and inflation (recently it has visibly dropped). Polish authorities are making
best efforts, with the support of the EU, to ensure security of energy supplies(the support is apparent in negotiations with Russia on the supply and prices21

of oil and natural gas). To date, the support has not been very effective, eventhough Western Europe also relies on imports of those fossil fuels. Poland
does not have definite programs of fracking shale gas due to the still on-goingassessment of the existing resources, and the inherent technological andecological issues. In addition, so far we have not elaborated a final concept
for the construction of a nuclear plant, which raised critical expert opinion
and social protests.
The European Union treats the environmental protection as an essential
element of its economic policy and a factor of social-economic development.
For that reason the environmental policy has a vital role to play in paying
more attention to the limits of natural resources as well as the needs offuture generations. The European Commission has presented Roadmap to a
Resource-efficient Europe. It has assumed a new ambitious target to reduceby 2020 the emission of CO2 by 20% or even 30% of what it was in 1990, andfirst of all to diminish total energy consumption by 20%. The first target isespecially difficult to reach by some countries, e.g. like Poland. Moreover, thedialogue is continuing with member states on greening tax systems andexcluding environmentally harmful subsidies.
The Environment Directorate-General in the European Commission was set
up in 1973 to protect, preserve and improve Europe’s environment for
present and future generations. There are four major priority areas: natural resources and health, environment and health, nature and biodiversity,
 climate change.
In this field of nature and biodiversity a big European success has been thecreation of “The Natura 2000” network of protected areas encompassing 18%of the territorial space of the European Union.
The 6th and 7th Environment Action Programmes reflect the findings of theEuropean Environmental Agency Report “The European Environment –state and outlook”. Among various UE documents we can find some following
important directives and programmes:22

 Impact Assessment Directives,
 Biodiversity Strategy, Multiannual Financial Framework, International governance on environmental affairs,
 European 2020 Strategy for smart, sustainable and inclusive growth, Comprehensive indexes of development (GDP and others).
4. Changes within the environmental policy in Poland
Within the 1970s and the 1980s, the ecological policy in Poland consisted
mostly in environmental protection programs that stipulated detailed
investment objectives within environmental protection area and the outlays
allocated from the budget, as well as other subsidies (that was characteristic
under the central economy system). At that time, there was created anelaborate system of economic instruments for the environmental protection
including, first of all, numerous charges and fines for the emission ofpollutants, the use of natural environment and making changes in it(dumping waste, cutting trees and shrubs). Those charges and fines weretransferred to earmarked ecological funds such as the national fund,voivodship funds, county and gmina funds for the protection of the naturalenvironment and water resources management.
Following the changes of the political system, it was decided to replace those
programs with a state issued document “State environmental policy” passedby the Parliament, and amended every five years, particularly the executive
acts (as a supplement to the document). That document sets out theobjectives for the environmental protection and the instruments for theirimplementation (rarely listing the important individual tasks). The
implementation of the EU directives has been attributed a major role inenforcing the ecological policy.
The current system of economic instruments based on numerous, andrelatively high, charges for the emissions has been sustained (to be includedin the costs of parties remitting them) as well as the relatively low fines forbreaching environmental laws (charged to the P&L Account). It has been
ascertained that the Western countries favour ecological taxes, not charges,
and that is why the EU was initially advocating changes to be made in this23

area in Poland. However, following an analysis and Polish comment it was
decided to consider the Central European solution as a proper one; it waseven set as an example to be followed by other countries. After 2000 there
was a significant increase in the charges for storing waste, while othercharges were merely indexed to the inflation rate. Following the example ofother western countries Poland introduced product charges, neverthelessmost revenue to date has been generated by a new charge levied on the
manufacturers and dealers of cars for the absence of a recycling system ofcondemned cars.
Environmental funds allowed to finance as much as 40% of investment
outlays on environmental protection in Poland within 1991 – 1995.
Consequently, those outlays grew from the initial 0.3% of GDP to over 1% of
GDP (comparable to countries of western Europe). Presently those funds
seem to have lost some significance (13 – 18% of investment outlays) andfinancing has been shifted to enterprise resources. National and voivodshipfunds have the registered status of artificial person, and they grant subsidies
and low interest loans earmarked for environmental projects, while thecounty and gmina funds were included in the budgets of those local
government entities in 2010.
Table 3. The structure of investment outlays on environmental protection in
Poland (in %)Specification
2006
2009
2010
2011
Sewage management and water protection
57.3
66.7
69.4
55.5
Protection of air and climate
26.2
19.8
20.2
25.8
Waste management, soil protection
10.5
9.1
9.0
7.6
Biodiversity and landscape protection
0.2
0.1
0.2
0.3
Decreasing noise and vibration
1.1
0.7
1.2
1.5
Protection against ion radiation
0.01
0.01
0.01
0.1
Unaccounted
for expenditureapprox
100
100
100
100
4.5% in 2011 9.2%
Source: Environmental protection, Main Census Office, Warszawa 2011, pp 402 and404.

Currently, the outlays allocated to environment al protection in Poland
amount to 46 billion PLN (about 11 billion euro), i.e. 3.5 – 4.5% of GDP. Thatsum is broken down into investment outlays (24%), current costs(maintenance costs of protection facilities, 25%), household expenses (51%).
24

The investment outlays grew from 10.9 billion PLN in 2010 to 12.2 billion
PLN in 2011 (almost 3 billion euro), while the required sum amounts to 15
billion PLN p.a. The structure of investment outlays on environmental
protection is shown in Tables 3 and 4.
Table 4 Structure of investment outlays on environmental protection by thesource of financing (in %)Specification
1.Gmina and enterprises own resources;
gmina 15 – 17%, industry 80 – 90%
2. Environmental funds(1991-95 approx 40%, 1999-2005 approx
21-25%)
3. Credit and loans, mainly granted bybanks
4. Budgetary resources, mainly gmina,state budget, mainly in 2011
5. Foreign resources (1991-2000 approx
3%, 2004. 12,2%)
6. Other unaccounted for
Total

2006

2009

2010

2011

45.5

46.0

44.2

47.7

17.6

18.3

13.9

12.7

11.4

9.4

13.8

7.0

2.75

3.1

3.6

10.2

19.2

18.9

22.0

18.5

3.6
100

4.3
100

2.5
100

3.9
100

Source: The same as for Table 3.

It might be ascertained that Poland has shown a satisfactory level ofadherence to the EU ecological directives. Following Poland’s accession to theEU, the Polish government has negotiated an additional 3-7 year transition
period to fulfill some obligations. Most noxious industrial plants have been
either shut down, or restricted and modified. Once the list of such plants
included over 500, then 80, and finally such ranking was abandoned.
Nevertheless, the EU has been introducing more and more stringent controls.
Hence there are some difficulties in adjusting to new standards withinmanagement and disposal of toxic waste.
The biggest challenge ahead of the industrial, energy and environmental
policy of the state seems to be the modernization of the power generationindustry, which is based in Poland on coal (90%). Such power plants emit
large volume of sulphur dioxide, carbon dioxide, and other pollutants.
Poland has had significant success in the reduction of CO2 emissions, morethan satisfying the stipulations of the Kyoto Protocol on the reduction of25

greenhouse gases, the cause of global warming. Due to this Poland has
profited from selling the greenhouse gases emissions rights. Nevertheless,the ambitious plans of the EU regarding reducing emissions by further 20%
by 2020 (and by 80% by 2050) put Poland in a difficult situation as it spells
accelerating costly investment in power generation industry and purchasing
additional emission rights. That in turn will substantially increase the costof power generation, and may hinder economic development.
In line with the modernization of coal fired power plants, attempts have been
made to supplement power plant fuels with natural gas and biomass (willow
wood and wood refuse) Poland is also implementing the program of
construction of small water power plants (water resources in Poland are notabundant), and quite recently the wind turbines. Power saving programs are
gaining momentum, particularly within the housing sector, In turn, public
facilities should need negligible volume of energy after 2019.
Table 5. Emmission of carbon dioxide in the European Union in tonnes per
capitaSpecification

2000

2005

2009

UE – 27
Czech Republic
Estonia
FinlandNetherlands
Germany
GreecePolandGreat Britain
Italy
Spain
FranceSweden

8,5
12,4
11,1
11,0
10,7
10,8
9,5
8,3
9,3
8,1
7,6
6,8
6,1

8,6
12,2
12,2
10,8
10,8
10,5
10,2
8,3
9,2
8,4
8,5
6,7
5,9

7,5
10,8
10,6
10,4
10,3
9,6
9,3
8,1
7,7
6,9
6,5
5,8
5,0

2009
2000
88,2
87,1
95,5
94,5
96,3
88,9
97,9
97,6
82,8
85,2
85,5
96,7
82,0

Source: Europe in figures. Eurostat Yearbook 2012.

5. Using the EU budget for financing environment at protection
Poland has been financing 18 – 20 % of investment earmarked for theenvironmental protection from the EU subsidies. The program“Infrastructure and the environment” has been targeted on that objective. In
practical terms, the countries that are the beneficiaries of the program pay
26more attention to infrastructure investment than environmental projects(including Poland), yet it does not discredit high opinion about the program.
The budget of the EU obtains revenue mainly from payments from thetreasuries of the member states set at about 1% of GDP. “The Financial
Perspective for 2007 – 2013”, ie the budget of the EU amounted to 1035
billion euro, that is over one trillion euro. The budget for 2014 – 2020 has
been cut due to the economic downturn experienced throughout the EU andthe declared need for savings. A draft of the budget, to be presented to theEuropean Parliament by the European Commission, quotes 908 billion euro(a budget must have positive balance, deficit will not be tolerated).
Despite a smaller budget, according to a new financial perspective Poland, as
the main beneficiary, is to receive 105.8 billion euro, i.e. approximately 441
billion PLN. That sum allocated to Poland is by 4 billion euro bigger thanwhat it received within 2007 – 2013. The funds received by Poland are to bebroken down as follows: 72.9 billion euro allocated to cohesion fund, and 28.5
billion euro to common farming policy and the development of rural areas.
The terms of allocation of those funds stipulate that usually they do notcover all costs of a project, but in most cases co-finance 50 – 70% thereof.
Hence enterprises of local government entities must provide their own share.
Another important ecological stipulation of the new budget is the so-calledgreen prerequisite for projects amounting to 20%. Hence, 1/5 of total outlays
on economic projects must be related to the protection of the naturalenvironment.
Bibliography
1. Best Practive in Analysing and Developing Environmental Policies.
Institute for European Environmental Policy, London – Brussels 2005.
2. Communication from Commission to the Council and European
Parliament – GDP and beyond: measuring progress in a changing world.
COM 2009 (0433).
3. J. Delors: Economic Governance in the European Union: Past, Present
and Future. “Journal of Common Market Studies”, vol. 51, 2013, no. 2.
4. L. and D. Dziawgo (ed.), K. Gorka: Finance and Environment (e.g.
Environmental funds in Poland). Dom Organizatora, Torun 2003.
27

5. Europe in figures. Eurostat Yearbook. European Commission,
Luxembourg 2012.
6. Cz. Glinkowski (ed.), K. Gorka: The chosen problems of effectiveness ofrestructuring (due to the system transformation). AE, Poznan 2006.
7. K. Gorka: The earmarked funds as a basic economic instrument ofenvironmental policy in Poland. “Aestimum” (Firenze University Press),
2006, no. 48, p. 1-17.
8. K. Gorka, P. Szyja: Regional policy of the European Union versus
Sustainable Development. “Barometr Regionalny” (Zamosc) 2012, no. 3(29), p. 7-12.
9. B. Poskrobko (ed.): Towards the Theory of Sustainable Development. PAN,
Bialystok-Warsaw 2007.
10.State environmental policy in 2009-2012 and perspective until 2020 (andexecutive programme). Ministry of Environment, Warsaw 2008.
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28

【Lecture’s Profile】
Dr. Kazimierz Górka
Professor Emeritus, Ph.D., works at the Cracow University of Economics,
former head of the Department of Industrial and Environmental Policy.
Co-founder, first chairman and activist of a Polish Division of the European
Association of Environmental and Resource Economists, active member of
the Polish Economic Society, advisor to the Ministry of Environment andlocal authorities, co-editor of the journal “Ekonomia i Środowisko”,
collaborating with American, Japanese, Lithuanian and other universities.
Author and co-author of many articles, books, expert reports and other works
on industrial economics, renewable energy, labour costs, economics ofenvironmental protection and environmental policy, especially in the field of
economic instruments for sector policies.

【Coordinators’ Profile】
Dr. Takayuki Yamaguchi
Professor, School of Business Administration, Kwansei Gakuin University
Kwansei Gakuin University, Ph.D(Business Administration). Prior toaccepting current position in 2009, he taught at Kwansei Gakuin University
as a full-time lecturer and an associate professor. Specializes in SME policy
in France and its theoretical study. His activities include Director of La
Société Franco-Japonaise de Gestion, Secretary General of the Society for
the History of Management Theories, Chairperson of external evaluation for
Credit Guarantee Association (Hyogo).
Dr. Akira Ichikawa
Associate Professor, Institute for Industrial Research, Kwansei Gakuin
University
Keio University, Ph.D. (Media and Governance). Prior to accepting current
position in 2012, he taught at Keio University, Nagoya University ofCommerce and Digital Hollywood University as a part-time lecturer. He also
worked at Keio Institute at SFC as a visiting senior researcher and Tokyo
Institute of Technology as a research fellow. His field of specialty is theregional study in the enlarged EU and global environmental governance.
29